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Interdicting Terrorist Funding

Want to make the country safer from terrorism? Take the money now being wasted on national ID cards, massive data mining projects, fingerprinting foreigners, airline passenger profiling, etc., and use it to fund worldwide efforts to interdict terrorist funding:

The government's efforts to help foreign nations cut off the supply of money to terrorists, a critical goal for the Bush administration, have been stymied by infighting among American agencies, leadership problems and insufficient financing, a new Congressional report says.

More than four years after the Sept. 11 attacks, "the U.S. government lacks an integrated strategy" to train foreign countries and provide them with technical assistance to shore up their financial and law enforcement systems against terrorist financing, according to the report prepared by the Government Accountability Office, an investigative arm of Congress.

More:

One unidentified Treasury official quoted anonymously in the report said that the intergovernmental process for deterring terrorist financing abroad is "broken" and that the State Department "creates obstacles rather than coordinates effort." A State Department official countered that the real problem lies in the Treasury Department's reluctance to accept the State Department's leadership in the process.

In another problem area, private contractors used by the Treasury Department and other agencies have been allowed to draft proposed laws in foreign countries for curbing terrorist financing, even though Justice Department officials voiced strong concerns that contractors should not be allowed to play such an active role in the legislative process.

The contractors' work at times produced legislative proposals that had "substantial deficiencies," the report said.

The administration has made cutting off money to terrorists one of the main prongs in its attack against Al Qaeda and other terrorist groups. It has seized tens of millions of dollars in American accounts and assets linked to terrorist groups, prodded other countries to do the same, and is now developing a program to gain access to and track potentially hundreds of millions of international bank transfers into the United States.

But experts in the field say the results have been spotty, with few clear dents in Al Qaeda's ability to move money and finance terrorist attacks. The Congressional report- a follow-up to a 2003 report that offered a similarly bleak assessment - buttresses those concerns.

Im with Adam. Almost as liquid as bits, dollars route around interdiction quite easily. There are at least 2 or 3 informal ethnic-based banking networks older than several hundred years, all of whom have survived this long by being very hard to interfere with. I dont think the U.S. would have much luck persuading these networks to disapear.

If you want to see something really ridiculous, read the FAQ from the Office of Foreign Assets Control-> http://www.treas.gov/offices/enforcement/ofac/
Businesses are supposed to screen their clients against the SDN list periodically to ensure that they are not giving or receiving funds from "enemies of the US." The way they suggest to do it: by running each one of your clients against the PDF version using the find feature in Acrobat. I think it's insane that they can threaten the consequences they do and provide no reasonable way to maintain compliance. I actually wrote a small web app (www.SdnCompliance.com) and made it available to help anyone gain compliance. At least it's a little easier to upload one contacts file rather than the sysaphean method they recommend.

How much will this training policy cost in order to bring "foreign countries" up to the high standard of regulation which is employed in, say, the United Kingdom ?

Even with all the sophisticated controls and monitoring that the London financial markets and industries employ, the results against terrorist funding have been absolutely pathetic, with only a tiny amount of money seized since September 2001:

Terrorist Assets
Dr. Vis: To ask the Chancellor of the Exchequer how much money suspected of being linked to terrorist assets (a) worldwide and (b) in the United Kingdom has been frozen since 11 September 2001. [223023]

Mr. Timms: Since 11 September 2001, 44 accounts totalling some £347,000 have been frozen in the UK. In total, 45 accounts, totalling some £378,000 are currently frozen by UK financial institutions. There is no global figure of the total assets frozen—monitoring frozen funds is a matter for individual jurisdictions.

All organisations and individuals whose assets have been frozen in accordance with the UN Security Council Resolutions, associated EC Regulations and domestic legislation are listed, by HM Treasury instruction, on the Bank of England's Financial Sanctions website. Asset freezing is an essential measure in countering the financing of terrorism by denying terrorists and their financiers access to funds across the world. Taking action not only freezes any funds in the UK but also creates a hostile environment to deter terrorists from using the UK's financial system in future. "

Much of even this small amount of money comes from actual raids on suspects houses or offices, rather than through the "anti-money laundering" and "anti-terrorist" financial surveillance systems and software which imposes costs and inconvenience on millions of customers:

Two weeks or so ago, the Economist had a very insightful review of this proposal (more tracking for sources of funds/compliance etc). They basically declared it unnecessary, since most banks already collect the information and it is so voluminous that no one is still able to process it.

The 'high standard' British system essentially interdicts ordinary people while missing terrorist funding almost entirely. The security forces have not yet even commissioned an IT system that will allow them to deal with the vast amount of data they receive, so the major effect is the slowing or blocking of innocent funds transfers. I personally had such a transfer blocked a couple of months ago, but have yet to hear from the anti-terror squad regarding my subversive interest in, er, Portugese-manufactured car interior panels...

Oct 1st the Financial Times noted that those "suspicious activity reports (Sars) have not been used effectively by police" http://news.ft.com/cms/s/e56f2dc6-3217-11da-9c7f-00000e2511c8.html
(subscription required for full article)
This is in spite of increasingly onerous 'know your client' regulations imposed on the financial industry and its customers over the last decade.

Schneier you realise you are talking largely about charities and not banks right ? Mostly charities that legitimately accept funding and legitimately apply that to aid in needy states, some of which is siphoned off to terrorist groups.

You want to talk movie plot threats, try the first 5mins of Black Hawk Down. Where the aid agencies are giving out food to Somalians and militias operating under the same leadership giving haven to al Qaeda at the time were stealing this.

What you are talking about is funding measures to control which aid agencies get food in the first place. The only useful measure being cutting off the food supply.

And this is supposedly a more useful measure in fighting terrorism than ID cards etc is it ?

Frankly you should quit commenting on matters concerning anti-terrorism efforts until you research the situation to which they are applied.

Commenting on the pros and cons of airport screening is one thing. Here you have no understanding of what is involved yet suggest pooling all money allocated to date on other methods into this ?
Just pass on commenting instead.

And anybody who thinks that's wrong by all means use the known sources of al Qaeda funding to date in your example of just why I'm wrong.

Then perhaps top it off with an explanation of just how much of a toss the Saudis are going to give no matter many billions you show up with to fund banking oversight.

And if you don't understand what massive soft money is to Saudi Arabia pretend you are talking about the US State Dept trying to fund vodka restrictions in Russia.

1, Three letter agency political infighting for funding and political clout.
2, Informal / non government accountable money transfere networks
3, Political interferance in other countries internal affairs (either political or economic).

The first is unfortunatly a historical given, all government agencies would rather spend their time fighting each other than doing the jobs that they are supposed to be doing, we even give it a friendly sounding name "Turf Wars" and laugh about it forgetting it is our money they are waseting.

The second problem as others have pointed out are in existance and have been for longer than any government. Even if they did not exist then it would not be to difficult to obsficate the transfere of funding via moderatly complex trading of goods (drug cartells for instance ship the equivalent of the US GDP without much constraint). The only way to stop this is not to allow any trade between countries (that's not going to happen any time soon).

The third problem is basically the root cause of the problem of terrorist and other activities that governments regard as hostile to themselves. The US and other nations have a history of toppeling governments for mainly economic reasons (dressed up as National Security) and have been doing so since before the Victorian era.

As the US and other governments do not appear to want to stop interfering in other countries internal economics and politics, the governments concerned must accept that there will be repercussions, either directly from the government of the country affected (war) or indirectly through it's people or sympathisers (Terorists, Insergents, Freedom Fighters, etc, etc)...

Historically the repucussions where by war or other armed conflict (Gun Boat Diplomacy). This is one reason why the US government has the largest standing army in the world and it's "defence" spending is larger than the next twenty nations... It effectivly stops any country considering going to war against the US.

However the US has always assumed that the Oceans around them make fairly strong defences. What it has not addressed is the brittlness of it's society and it's infrestructure (9/11 and the recent huricans have shown just how brittle the US is in these areas).

It has been known and written about for several thousand years that you attack your "foe" in their most vulnarable areas, preferably with out giving advanced warning.

In modern times with the help of rapid effective and mainly anonymous transportation provided by many nations you can take a war directly to the heart of a nation and hurt them where they are most vulnerable (this is effectivly what terrorisim is, unanounced warfare on your home teritory).

When you have the ability to move finances directly or indirectly that cannot be stoped or monitored then you must also accept that people will be able to finance these repercussions readily and easily. With the consiquent easy availability of guns, other wepons and more recently chemical and biological agents, then you get a very dangerous mixture.

I guess that quite a few people in government know and understand the above, which is why they spend more time fighiting other departments, it is afterall from their perspective a lot more effective use of their time and resources than trying to do their mandated job, that they know is effectivly impossible to do except post incident.

The real advantage of the situation as far as the governments are concerned is that they can use the fear factor to raise taxes that they can diviy out to the companies that pay their campaing contributions... Also they can then keep themselves in power by comming up with legislation that alows them to monitor and stop all political oposition...

The main reason SARS are inefective, is actually quite funny in a very sad way.

Basically you are a solicitor / architect / builder or any other member of a trade where you have a SARS obligation. What do you do, try and work out what is going to get you into trouble and report just that, or play safe and report everything....

1) Attempting to unilaterally control the detailed economy of the entire planet, is simply not practical!

2) To have any hope of even partial effect, we'd need actual cooperation from other nations. "Do what we say or we'll hurt you" is no way to get cooperation, but that's the only approach ShrubCo understands.

3) As the above-mentioned State/Treasury backbiting highlights, we don't even have internal coordination on the task, for much the same reason as #2.

4) Our enemies are unlikely to cooperate, and they have their own supply lines, allies, and financial networks.

5) Thanks to the abusive behavior of the ShrubCo administration, even most of our friends are backing off to arms' length. Some of them are making soothing noises, but don't mistake those for obedience. They're just treating us like a raving drunk....

"Im with Adam. Almost as liquid as bits, dollars route around interdiction quite easily. There are at least 2 or 3 informal ethnic-based banking networks older than several hundred years, all of whom have survived this long by being very hard to interfere with. I dont think the U.S. would have much luck persuading these networks to disapear."

While I certainly agree with you, I think attacking the flow of money is one of the few fruitful things we can to to prevent terrorism.

Still, though, the best thing we can do is to deal with the geopolitical issues that are causing terrorism -- and making it popular with non-terrorist sympathizers -- in the first place.

Actually, that might be quite effective if it is truly random, and they stop everyone. But... then you'll get people like me who will say. "Yes, I have ID. No, you can't see it." I'm quite willing to identify myself, but I refuse to be searched without a warrant, and I don't have to show them any ID. And if they are stopping everyone from coming out of a building then they are going to have problems. That potentially has both first and fourth amendment implications. The first amendment states that I have the right "peaceably to assemble, and to petition the government for a redress of grievances." I can't do that if they won't let me out of the building without being searched or showing ID. Having to show ID is a breach of the fourth amendment. "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." Unless there is a warrant then they don't have to see my ID.

The anti-money-laundering and anti-terrorist regulations in the UK are fantastically annoying for individuals. For a fourteen-year period I was essentially unable to open a bank account here because I didn't have a TV or a driving licence. Without those, I couldn't provide enough forms of ID for the banks to trust my identity and open an account.

The only suggestion the banks had was that I buy a TV and pay the TV license fee, or learn to drive!

(The really mind-numbing thing was that they didn't accept my passport as a form of ID! It seems they have to be newer than a particular date or something, because after my passport expired and got renewed, the banks accepted it without a qualm...)

(Had I been a criminal, of course, acquiring suitably convincing fake ID would have been trivial.)